British esports company and Fnatic parent Sannpa Ltd. launched a crowd equity campaign on Crowdcube with a minimum funding target of £1M GBP ($1.32M USD) in exchange for a 0.99% stake in the company, which puts the organization’s pre-money valuation at £100M ($132M).
While the campaign was launched to the public on Nov. 19, it was available to pre-registered prospective investors 24 hours early and raised 94% or £945K ($1.25M) of its target before its official launch. At the time of writing, the campaign successfully raised its initial target within 70 minutes of going public with more than 2,000 investors contributing and is now overfunding. The campaign is scheduled to close on Dec. 7.
Sannpa recently closed its five-year strategic plan and intends to use the proceeds of the crowd equity campaign to accelerate some of the plan’s short-term targets. Fnatic’s current primary business goal is to continue growing its brand and fanbase as well as bringing its esports teams at the forefront of competition told Lucien Boyer, who joined Fnatic as its chairman last month, The Esports Observer in a phone call. He added that the crowd equity campaign is a great chance to involve its loyal fanbase by enabling them to “own a piece of it”.
Boyer also explained that the idea was inspired by European soccer clubs, many of which offer official club memberships for an annual fee to their fans, while others went public allowing supporters to become shareholders. Boyer also pointed out two further benefits of the campaign as it will provide transparent access to Fnatic’s numbers and strategy to its supporters and it will provide Fnatic with a group passionate to contribute, which could prove helpful in sharing their opinions and contributing to research and product testing.
Sannpa wholly owns Fnatic including its primary London-headquartered Fnatic Ltd company as well as its associates Fnatic PTY Ltd. (Australia), Fnatic GmbH (Germany), Fnatic Business Services D.O.O. (Serbia), and Deathbrush Ltd. (England), as well as all their subsidiaries. Furthermore, Sannpa holds a 97% stake in the gaming gear company Fnatic Gear Ltd. and all its subsidiaries.
Similar to most esports organizations, Fnatic is currently monetizing from three revenue segments: esports revenues such as media rights deals sharing, in-game item revenue sharing, and prize money; revenues from partnerships such as product and logo placements or physical activations; and products such as apparel and gaming equipment.
Throughout those revenue segments, Sannpa generated $11.5M in revenues for 2019 excluding prize money won in esports competitions and is expecting to increase revenues to $13.5M in 2020, which would mark a compound annual growth rate (CAGR) of revenues excluding prize money of rough 25% since 2018. Going forward, the company is looking to add a fourth revenue stream in digital revenues.
While the overall expected revenues CAGR for the period of 2018 to 2020 is approximately 25%, revenues from partnerships are expected to reach a 55% CAGR in the same period (which includes a 68% revenues growth from 2019 to 2020 year-to-date from non-endemic partners) and revenues from its gear segment increased by 58% year-over-year from 2019 to 2020 year-to-date. Partially driven by the increase in revenues, Sannpa is expecting to cut its loss of approximately $9M in 2019 in half for 2020 with a loss before interest, taxes, depreciation, and amortization of approximately $5M.
Sannpa expects to become profitable in 2023 with $3M in earnings before interest, taxes, depreciation, and amortization (EBITDA) generated from $73M in revenues excluding prize money in that year. The company expects a 60% revenues CAGR for the period between 2021 and 2025, with the revenues from the gear segment expected to show the largest growth and contributing the biggest share of revenues from 2021 going forward.
Investors are able to buy into the company with as little as four shares priced at £4.67. All participants of the crowd equity campaign will receive ordinary shares, which will be held by Crowdcube Nominees Ltd. unless an investor’s contribution exceeds £250K, in which case the investor will receive and hold preferred shares directly. Additionally to a stake in the Fnatic parent company, investors will be rewarded with perks such as apparel and gear depending on the size of their contribution.
The crowd equity campaign adds Fnatic to the list of very few core esports organizations with a publicly available valuation. Recently, British esports organization Guild was valued at £50M ($66M) in its initial public offering at the London Stock Exchange, while Astralis Group was valued at $75M during its initial public offering at the Nasdaq OMX Nordic market in December 2019.
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